Can we use SAN/NAS in HCI environment? If yes, will it behave as per vSAN algorithm? I need to understand what if I have my existing HCI environment with vSAN 3 node cluster and I am trying to leverage external storage as well. How does it work?

We can add external SAN/NAS to the same esxi nodes but this will not be apart of existing vSAN datastore cluster, Right?

Yes, that's also what Bob wrote.

Moreover, please let me know if the same esxi nodes with vSAN datastore and external storage can be managed by same Vcenter Management Console?

Yes. From traditional storage side, nothing changes. It's exactly the same as without vSAN. At the end you will have at least 2 datastores. One is vSAN backed and the other is a regular iSCSI, NFS, FC or local datastore as you know it without vSAN.

vSAN is object based storage, Is there any role of iSCSI target in vSAN datastores?

Basically iSCSI is not required for the setup and operation of vSAN and it doesn't use the iSCSI protocol for internal communication. However, you can configure vSAN as iSCSI target and use vSAN as data storage on other systems outside the vSAN cluster. But ESXi is not supported as initiator. That means, you can't connect a vSAN datastore from ESXi cluster A to ESXi cluster B. Instead you could connect a vSAN datastore to a physical server with Windows or Linux as OS via iSCSI.

However, in regard to vSAN iSCSI protocol, I would like to highlight few lines as mentioned in document below. Need to know if this statement is correct.

"vSAN does not behave like traditional storage volumes based on LUNs or NFS shares. The iSCSI target service uses LUNs to enable an initiator on a remote host to transport block-level data to a storage device in the vSAN cluster".